Steelcase warns of lower earnings
Sees second quarter 14-19 cents below consensus
By Sam Ames, CBS MarketWatch
Last Update: 11:33 AM ET Aug 27, 1999 Also: NewsWatch
GRAND RAPIDS, Mich. (CBS.MW) -- Office-furniture maker Steelcase said after the bell Thursday that earnings for the second quarter would come in significantly below analysts' expectations, taking the company's stock down a shelf Friday.
The Grand Rapids, Mich.-based manufacturer of furniture and other office interior products predicted earnings for the quarter would amount to between 20 to 25 cents, compared with analysts' consensus of 35 cents, tallied by First Call.
Steelcase (SCS: news, msgs) also said in a statement that its earnings forecast includes a 4-cent after-tax charge for the write down of certain assets.
Shares of Steelcase fell 7/8 to 15 1/8 in early trading Friday.
The company attributed the earnings shortfall to a combination of manufacturing inefficiencies related to increased order levels and a squeeze on gross margins from ramp-up costs and the introduction of new products. Pricing pressures in the furniture market also continue to negatively affect gross margins.
"We are positive about the strong incoming order rate and backlog we are currently experiencing and expect that to translate into increased third-quarter sales," said James P. Hackett, president and chief executive officer. "Some of the margin pressures will be alleviated in the second half of the year as we make the necessary shifts in manufacturing capabilities. However, margins for the full year are not expected to equal prior-year levels."
Steelcase said it has led the office-furniture industry in sales every year since 1974, with a product portfolio that includes office furniture, interior architectural products, technology products and related products and services. The company reported fiscal 1999 worldwide net sales, including unconsolidated joint ventures, of over $3 billion. |
